MOHAMMAD ALI KHAN Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) This reference out of the wealth-tax assessment of the former Ruler of Rampur. The proceedings related to the assessment year 1961-62. On the relevant valuation date Nawab Sir Syed Raza Ali Khan was the Ruler. He died subsequently and is presented in these proceedings by the legal heirs.

(2.) The short question raised in this reference is whether the assessed is entitled to the exemption under s. 5(1)(iii) of the W. T. Act, 1957, in respect of his entire palace at Rampur known as Khas Bagh Palace. It is common ground that the Khas Bagh Palace consisted of a number of buildings. Some of these buildings were actually occupied by the Ruler but quite a few of them were not so occupied and were let out to various tenants. A list of fourteen such buildings which were let out to various officers, departments and other tenants has been set out in the order of the Tribunal. The assessed claimed that he was entitled to the exemption of the value of the entire Khas Bagh Palace including the above fourteen buildings under the provisions of s. 5(1)(iii) referred to above. That provision, at the relevant date, read as follows:

(3.) The WTO allowed the assessed exemption in respect of those portions of the Khas Bagh Palace which were in the occupation of the assessed. But he estimated the market value of those buildings which had been let out at Rs. 3,55,000 on the basis of the rental income derived by the assessed and held that the value of those buildings would be liable to be included in the taxable wealth of the assessed and was not exempt under. 5(1)(iii). This conclusion of the WTO having been confirmed by the AAC and the Appellate Tribunal, the assessed has obtained a reference to this court on the following question: